Tax experts are poring over the Senate version of the Republican health care bill, examining the bill’s tax provisions and its differences from the House version of the legislation. Here’s what they have to say.
The two versions of the Senate and House bills are not that far apart, per Dustin Stamper, a director in Grant Thornton’s Washington National Tax Office. “The tax titles are pretty similar in a lot of ways,” he said. “The biggest difference is what to do going forward to continue to offer refundable tax credits for purchasing insurance. The Senate draft is much more generous than the House bill.”
Elliott, the lead executive responsible for overseeing all aspects of the ACA implementation at the IRS, cautioned that what was released was a discussion draft and is likely to change during negotiations.
“Both the House and Senate effectively repeal the individual and employer mandate,” she said. “And they both make significant changes to Medicaid. While the Code will still require applicable individuals to maintain minimum essential coverage, the penalties for filing to do so will be lowered to zero, effective as of Jan. 1, 2016.”
“Both the House and the Senate versions repeal ACA taxes such as the taxes on medical devices, insurance providers, and the tax on high-interest earners,” she noted. “That’s what’s drawing the ire of critics who are claiming it’s in part a tax break for the rich.”
The discussion draft of the Better Care Reconciliation Act of 2017 expands the Affordable Care Act’s “state innovation waivers,” also known as “Obamacare 1332 Waivers,” to provide states additional flexibility to use waivers that exist in current law to decide the rules of insurance and ultimately better allow customers to buy the health insurance they want.
“The key provision for individual taxpayers is that both the House and Senate versions repeal the 3.8 percent tax on net investment income,” said Howard Wagner, managing director in Crowe Horvath’s National Tax Office. “And the Senate version follows the House bill in that the 0.9 percent additional Medicare tax on wages and self-employment income is not repealed until 2023.”
“The important issue for individuals is that until something is enacted, everything is subject to change,” he added. “If you’re considering a transaction such as the sale of a business or the sale of stock that would result in the imposition of tax on net investment income, don’t do it today on the assumption that the tax will be gone for 2017. Aside from the fact that the bills don’t make it into law, there is always the possibility that negotiations could result in changes to the effective date. The final bill that ultimately passes might not repeal the NII tax until 2018 or later.”
The BCRA is slated for negotiation and a vote as early as next week, but four Republican senators have already said they’re not on board. Senate Majority Leader Mitch McConnell, R-Ken., needs 50 votes out of 52 Republicans in the Senate, assuming every Democrat will vote against the bill.
Talley offers a broad spectrum of services to fulfill the needs of high net worth individuals, entrepreneurially driven companies and their owners. Whether you are considering an M&A transaction or experiencing a financial windfall event, the professionals at Talley & Company can make the most of both your earnings and winnings.

 

Source: Accountingtoday.com; June 23, 2017

“No taxes for you!”
The CFO of the soup chain made famous with Seinfeld’s “Soup Nazi” character, Robert N. Bertrand, CFO of the Soupman, Inc. has been indicted for tax crimes. The indictment alleges 20 counts of failure to pay Medicare, Social Security, and federal income taxes. Soupman, Inc. is based in Staten Island, and licenses the name and recipes of Al Yeganeh, the “Soup Nazi” character from Seinfeld. No crime has yet been proven, but the charges are quite serious.
Prosecutors claim that Bertrand was cutting corners in a big way; alleging that between 2010 and 2014, Bertrand paid Soupman employees on the side in unreported cash amounts. A conviction could bring up to five years’ imprisonment.
The indictment claims that he also compensated certain employees in large unreported stock awards. Bertrand never reported this employee compensation to the IRS, and never paid trust fund taxes on the cash payments or the stock awards. The indictment suggests that it may be difficult for Bertrand to claim ignorance. Prosecutors even say that Bertrand received a 2012 warning from an external auditor that these payments should be reported to the IRS.
In fact, from 2010 through 2014, Soupman’s total approximate unreported cash and stock compensation was $2,850,967.59. That translates to a total approximate tax loss to the United States of $593,971.52. Noting the dollars at stake to the federal government, the authorities have also mentioned the potential loss of future Social Security and Medicare benefits for the employees of Soupman Inc.
If you are in business, it can be tempting to figure that you have to keep the rent paid and supplies ordered, and that the IRS won’t miss the payroll tax money if you just divert it temporarily. But, no matter how good the reason, the practice is dangerous. Any failure to pay—even late payment—is serious, regardless of how or why the employer or its principals use the money.
When a tax shortfall occurs, the IRS will usually make personal assessments against all responsible persons who have ownership in or signature authority over the company and its payables. The IRS can assess a Trust Fund Recovery Assessment, also known as a 100-percent penalty, against every “responsible person”. You can be liable even if have no knowledge the IRS is not being paid.
While nearly 70% individual taxpayers will receive a refund this tax season, most taxpayers don’t look forward to Tax Day and are willing to do almost anything to get out of paying taxes. A recent survey by GOBankingRates asked over 1,000 U.S. citizens: “Which of the following would you do to get out of paying your taxes?” The respondents could select from the following answer choices. Here’s how they responded:
  • Perform 5 karaoke songs for your company: 32%
  • Go without WiFi for 1 year: 18%
  • Have your credit score reduced by 50 points: 16%
  • Gain 20 pounds: 13%
  • Have your web browsing history made public: 11%
  • Be stuck with skunk stench for 6 months: 5%
  • Give up half of your retirement savings: 5%
Nearly one-third of respondents to the survey said they’d gladly get up and perform five karaoke songs in front of their company if they could avoid paying taxes. This choice was the clear winner for both females and males in every age group. It’s evident that the clear majority of people interested in getting out of paying their taxes are not afraid of sharing their singing skills with a large without the acoustics of the shower assisting them in their performance.
While the potential embarrassment of singing karaoke would seem trivial if it meant being rewarded with less taxes, some Americans are even willing to put their finances at risk. More than 15% of those surveyed were willing to take a 50 point hit to their credit score in exchange for not paying taxes. By age, GenXers (ages 35 to 54) are the most willing to choose this option. By geographical location, Southerners are more willing to choose this option than those in other parts of the country: those in the Northeast were least likely to choose this option.
A surprising 5% of those surveyed would be willing to give up half of their retirement savings in exchange for not paying taxes. That said, most retirement reports have found that a third of Americans have $0 saved for retirement…so maybe there’s not a lot to lose? GenXers were three times more likely than millennials to choose this option.
GenXers are also more willing to allow their web browsing history to be made public while seniors are more willing than any other age group to go without WiFi for a year. We wonder how many seniors are actually are familiar with WiFi, and what they would actually be giving up if they chose this option.
What would you be willing to do in order to avoid paying your taxes this year?
Talley LLP
Advice. Solutions. Results.
If you’re one of the 40 million Americans who has still not filed their taxes this year, here’s a friendly reminder that might offer a little relief: You have an extra three days to submit your annual return.
Tax Day 2017 is on April 18 this year because of something called the District of Columbia Compensated Emancipation Act, signed into existence by President Lincoln on April 16, 1862. With the stroke of his pen, Lincoln not only freed more than 3,000 enslaved people in the District of Columbia and compensated their owners, but he also messed big-time with Tax Day for years to come.
Does all this ring a little bell? It should. Because last year a similar delay occurred thanks to the holiday, which is observed in D.C. but is not an official work holiday in most places. And last year was even weirder because the emancipation holiday fell on a Saturday but was celebrated on Friday the 15th — gotta get that day off from work! — which meant Tax Day was shoved back to Monday the 18th.
Elsewhere in the United States, the emancipation of slaves is celebrated on different dates in Florida (May 20), Puerto Rico (March 22) and Texas (June 19). And similar events take place throughout the Caribbean, including Anguilla, Bahamas, Bermuda and Barbados, though many of these observances happen in August to commemorate the the day slavery was abolished in the British Empire, which was August 1, 1834.
This time around, we’ll have to wait until Tuesday, April 18, to settle our bills (or refunds) with Uncle Sam.
Which means all the procrastinators out there still have at least three more days to stress out.

Talley

Advice. Solutions. Results.

“The Situation” finds himself with another bad tax situation in his hands. In September 2014, Michael “The Situation” Sorrentino, ex-star of the infamous MTV show “Jersey Shore”, and his brother, Marc, were indicted for tax offenses and conspiring to defraud the U.S. Now, new charges have been brought against both men. Sorrentino is now also charged with tax evasion and structuring funds to evade currency transaction reports. His brother, Marc, is now also charged with falsifying records to obstruct a grand jury investigation.
The superseding indictment alleges that the brothers conspired to defraud the U.S. by not paying all federal income tax owed on approximately $8.9 million that Sorrentino earned between 2010 and 2012. It is alleged that the brothers filed or caused to be filed with the IRS false tax returns that understated gross receipts, claimed fraudulent business deductions, disguised income payments made to the brothers and to other individuals and underreported net business income.
The brothers also allegedly commingled funds among business and personal bank accounts, and used the money from the business bank accounts to pay for personal items, such as high-end luxury vehicles and clothing.
If convicted, the Sorrentino brothers face a statutory maximum sentence of five years in prison on the conspiracy count, and three years in prison for each count of aiding in the preparation of false tax returns. Michael faces a statutory maximum sentence of 10 years in prison for each structuring count, and five years in prison for the tax evasion count. Marc faces a statutory maximum sentence of 20 years in prison for obstruction. They also face a period of supervised release, restitution and monetary penalties.
How’s that for a Tax “Situation”?

 

With over 25 years’ experience consulting with industry-leading companies, we understand the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

Claim another victory for the (not so) little guy vs. the IRS: Amazon.com Inc. won a key victory over the Internal Revenue Service in a dispute worth over $1.5 billion relating to the online retailer’s transactions with a Luxembourg subsidiary.

The U.S. Tax Court ruled Thursday that the IRS made arbitrary determinations and abused its discretion in several instances, marking another setback for the agency in high-profile international corporate tax cases. It wasn’t clear from the ruling what Amazon’s ultimate tax bill would be.

The case involved a series of transactions known at Amazon as Project Goldcrest that transferred certain U.S. assets, such as software, trademarks and customer lists, to their Luxembourg headquarters, which helped lower the company’s tax bill in 2005 and 2006.

According to an annual report filed by Amazon, the company’s tax bill would have increased by about $1.5 billion plus interest for those two years alone, with the possibility of additional bills for years beyond that,

Amazon isn’t out of the woods yet.  In a similar case last year, Apple faced a potential bill of billions over its Irish tax affairs after a European Union ruling last year. Amazon will still face scrutiny in Europe, where Brussels is examining Amazon’s European tax deals to determine if they constitute illegal “state aid” from Luxembourg to the company, benefits that could give them an unfair advantage over rivals.

Only broadly experienced tax advisory professionals can provide a truly global perspective so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us here.

March Madness is one of the biggest gambling events of the year: Americans bet $9.2 billion last year on the tournament through office pools, offshore sites and bookmakers, according to the American Gaming Association. But few people realize that if they get lucky, the IRS gets lucky too.
While there are a lot of eyes on Warren Buffet’s employee bracket competition, the battle wages on for millions of others who’ve placed friendly bets in pools that carry much better odds, though of course for much smaller amounts of money. Yet we’re willing to wager that few (if any) of them have been thinking about how winning would impact their taxes. Of course, here at Talley, you know we do just that. That’s because whether there’s $1 million per year for life at stake or $100, March Madness bets are classified as gambling, and gambling is taxable. 
Like with any day at the track, outing to a casino, or purchase of a lottery ticket, cash and non-cash winnings from March Madness bets are taxable. All winnings should be reported on Form 1040 as “Other Income” (line 21). In addition, you may be required to pay an estimated tax on your gambling winnings.  
Special paperwork comes into play only if your winnings are over $600 or 300 times the wager (lucky you, if that’s the case). Gambling winnings in excess of $5,000 could also be subject to a tax withholding requirement before the winning payout is made to the recipient. If luck wasn’t on your side, take heart-some gambling losses can also be deductible if you itemize and keep good records.
If you enjoy the entertainment making a trip to Vegas to try your luck at the slots, or in the rare instance that you make a living as a professional gambler, detailed win-loss records are a must.  
Talley offers a broad spectrum of services to fulfill the needs of high net worth individuals, entrepreneurially driven companies and their owners. Whether you are considering an M&A transaction or experiencing a financial windfall event, the professionals at Talley & Company can make the most of both your earnings and winnings.

Here’s something you might not know: Over 1.33 billion chicken wings and 49.2 million cases of beer will be consumed during this weekend’s championship football game. 

But what happens when the red-hot Atlanta Falcons and the experienced New England Patriots, a team that has played in a record 8 big games, go toe-to-toe in Houston Texas? We’re hoping it’ll be an epic game, but many players involved already have something to be thankful for, a bump in pay due to the big game being in Houston, and Texas doesn’t collect income tax.

Since pro athletes work in numerous states, they’re affected by each state’s different income tax level, which has affectively been termed the “jock tax”. That means that for every game they play in, they have to pay the income-tax rate of the state where the game is played. However players on the Atlanta Falcons and New England Patriots are in luck this year: everything may be bigger in Texas, except the taxes.

What does that mean for each player’s piggy bank? Each player on the winning team will be cut a $107,000 check by the NFL, while the losing team’s players will receive $53,000. Although Texas has no state income tax, Patriots and Falcons players who are residents of states with income taxes will still be taxed by those states as well as the federal government. This means Tom Brady, who reportedly is a resident of Massachusetts (5.1% state income tax rate), and Matt Ryan, who reportedly is a resident of Georgia (6% state income tax rate), will not receive a tax free check, just a slightly higher one than if the game were played in their home state or another state with a higher tax rate.

By comparison, last year’s Super Bowl was in the Bay Area, and many players had faced California’s top tax rate of 13.3% on their Super Bowl paychecks, so Brady and Ryan probably aren’t complaining about the change of venue.

The Pats and Falcons are also lucky they’re not playing in next year’s championship game scheduled to be played in Minnesota, which has a 9.85% income tax.

Like NFL athletes, many entrepreneurs hit new revenue strides and quickly find themselves the decision-makers of an increasingly intricate business playbook facing many additional tax “flags on the play”. We have yet to hear clients complain about quarterbacking in more money, but many soon come to see that having an expert advisory team can help avoid unnecessary fumbles and maximize growth. With a full playbook of services complimenting the needs of entrepreneurs and their closely-held businesses, Talley can offer you an accurate look at financial, tax and legal insights you need in order to call the best plays for you and your business.

What does the holiday season mean to you?  For many, it is a time where families come together and celebrate their traditions and the spirit of the holidays. It’s also the season for giving: Americans donated a whopping $373.25 billion last year. While giving to your favorite cause means much more than just tax savings, if you decide to donate your time, money or services/products to a charitable cause, understanding how the IRS treats contributions from a tax-deduction perspective can help you maximize your dollars and efforts. Here’s what entrepreneurs and their businesses need to know.

Not Every Charity is Eligible with the IRS. If you have a cause in mind, you can determine if it’s an eligible 501(c)(3) for tax-deduction purposes using this IRS search tool.

What You Can and Can’t Deduct. There are many types of tax-eligible contributions, and the IRS handles them all differently. These are some general guidelines:

  • Donating Money – Typically, monetary contributions made within the current tax year can be claimed for a deduction and itemized on Schedule A of your return.
  • Donating Inventory or Property – You can deduct the fair market value of inventory or property donated, but the contribution must be made to the organization. For example, backpacks made by your company and donated to children at a youth center would not be ineligible, but if provided to the youth center itself to distribute, they would. The fair market value must be assessed for anything over $500, and items over $5,000 generally require an appraisal. A tax attorney can help you properly value and classify all kinds of donations based on very specific IRS rules.
  • Volunteering – While the monetary value of services your business renders can’t be claimed, some expenses incurred for performing them can. For example, if your marketing firm has agreed to assist with the design and printing of invitations, t-shirts and flyers for an upcoming charity auction, the cost of t-shirts, printing, and mileage to and from the event can be deducted. However, your normal rate for designing and developing those projects cannot.
  • Getting Something in Return – If you receive something as a result of making a contribution, your efforts may be classified as something other than a donation. For example, let’s say your company makes soccer balls and you donate to a local soccer league that, in return, runs an ad for your business at their facility. This is now an advertising expense that can be deducted on Schedule C. Here’s a different scenario: You make a contribution of $1,000 to an organization and, in return, receive admission to a sporting event for which a ticket would normally cost $300. The IRS allows you to deduct the difference, which in this case would be $700.

Limits, Deadlines and Paperwork
No more than 50 percent of your income can be claimed as a tax deduction, and all donations must be paid by the end of the tax year. The IRS also requires a written statement from the organizations you contribute to showing the place, date, amount and nature of the expenses claimed.

No matter the amount, your generosity in gifting time and money to worthwhile causes can have a significant impact on your tax liability. While tax considerations should never drive your charitable giving, it makes sense to structure your gifting to maximize the tax benefits. If you have questions regarding your gifting or estate plan, please contact Talley & Company today.

The European Union’s main regulatory body, the European Commission, has sent Apple a staggering tax bill of an estimated $14.5 billion for unpaid taxes. While the commission had been expected to rule against Apple, both Apple and the U.S. government had anticipated a much smaller amount. Here is how it happened and why U.S. taxpayers may end up having to pay most of the bill.
Apple, like many other big U.S. tech multinationals, built its European headquarters in Ireland. While there are various reasons Ireland is attractive to U.S. tech companies, the most crucial attraction is Ireland’s very corporation-friendly tax system. Apple located its intangible intellectual property in subsidiaries in Irelend, which earned about 90 percent of Apple’s foreign profit, protecting it from tax authorities outside of Ireland.
Other countries in the European Union are concerned with Ireland’s tax policies, believing that Ireland is stealing business as well as tax revenue. Until now, the European Union had limited authority over taxes making it very difficult for these countries, or European authorities, to do anything about it. Now the European Commission has taken the stance that Irish tax policy for multinationals is a kind of state aid to business, which the European Commission does have jurisdiction to police. The European Commission has decided that Ireland’s tax arrangements are an illegal state subsidy, which would force Ireland to reverse the subsidy and demand back taxes from Apple.
“It’s also possible that the kinds of payments that are contemplated by the EU decision today, at the end of the day, are merely a transfer of revenue from U.S. taxpayers to the EU,” said White House spokesman Josh Earnest in a press briefing on August 30, 2016. “That’s the crux of our concerns about this approach.”
If Apple was required to pay billions in back taxes to Ireland, it could then deduct those payments from what it owes to the Internal Revenue Service (IRS), either retroactively or in future returns. Those deductions, could reduce Apple’s tax bill to the U.S. government, ultimately lowering the amount collected by the IRS. Theoretically, that would mean U.S. taxpayers would have to make up the difference, or the government would simply have to go without those monies.
Only broadly experienced tax advisory professionals can provide a truly global perspective so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. Talley & Company welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us here.

 


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